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HomeMy WebLinkAbout12/07/2004, PH5 - PUBLIC HEARING OF EMINENT DOMAIN PROCEEDINGS FOR THE ACQUISITION OF CERTAIN REAL PROPERTY INTERESTS council. j ac En as Repout 1.N®6c P/4 S- CITY O F SAN LUIS OBISPO FROM: Jonathan P. Lowell, City Attorney Ji' Jay Walter, Acting Public Works Director SUBJECT: PUBLIC HEARING OF EMINENT DOMAIN PROCEEDINGS FOR THE ACQUISITION OF CERTAIN REAL PROPERTY INTERESTS REGARDING THE CALLS JOAQUIN RELOCATION PROJECT CAO RECOMMENDATION Open the hearing, review facts, accept comments, close the hearing and adopt the Resolution of Necessity to initiate eminent domain proceedings against the subject property. DISCUSSION Staff was instructed to make an offer to purchase the interest in and to the real properties shown on the attached map marked as Exhibit "A" and Exhibit `B" for streets and roads, construction easements and slope easement purposes and all uses appurtenant thereto. The properties in question are portions of the parcels located at 1625 Calle Joaquin and 1585 Calle Joaquin. The City made initial offers to purchase the real property interests, as shown on Exhibits A and B pursuant to Section 7267.2 of the California Government Code. These offers were for the full amounts determined to be just compensation for the subject property interests. Although discussions have been amiable with the property owners, settlement agreements have not been reached for the acquisition of the property interests and therefore the City must consider eminent domain proceedings at this time in order to obtain the property interests for public purposes. As to the findings of the proposed Resolution of Necessity, City staff has the following comments: Necessity. The City has heretofore adopted major goals for FY 2003-05. As part of those major goals, the relocation of Calle Joaquin was determined to be an imperative initial phase of improvements for the high priority reconstruction of the US 101/Los Osos Valley Road Interchange project. The City has previously approved a development project along Los Osos Valley Road and as part of that approval, required the developer to design the Calle Joaquin relocation, obtain necessary rights of way and seek permitting for public road construction. The developer was unable to reach agreement with the property owners concerning the properties needed for the public improvement project. The properties to be acquired are essential for the implementation of this public improvement project. The City Council has reviewed and approved the public improvement project. C� PUBLIC HEARING OF EMINENT DOMAIN PROCEEDINGS FOR THE ACQUISITION OF CERTAIN REAL PROPERTY INTERESTS REGARDING THE CALLE JOAQUIN RELOCATION PROJECT Page 2 Public Good Versus Private Iniury. The public interest, convenience and necessity require the acquisition of the interest in and to the properties for the development of this public improvement project in order to improve public safety and eliminate existing traffic and interchange systems that are inefficient and unsafe. The project is planned and located in the manner that will be most compatible with the greatest public good and least private injury in that staff has worked carefully to minimize the amount of property to be acquired.in order to accomplish these needed traffic circulation improvements. The property to be acquired is necessary for the project because there is not other suitable property which can be used to accomplish this project. CONCURRENCES The City Attorney's office, the Public Works Department and the Community Development Department concur in the recommendation. FISCAL IMPACT None. As a condition of its development approval granted by the Council last year, the project developer will pay all costs of the real property acquisition, including the City's legal costs to acquire the subject property interests. The project developer will later be partially reimbursed from Transportation Impact Fund monies as other property owners in the area develop their properties. ALTERNATIVES The City may decline to use its power of condemnation to acquire these property interests. ATTACHMENTS Resolution of Necessity Exhibit "A"—Map of Property Location 1625 Calle Joaquin Exhibit `B"—Map of Property Location 1585 Calle Joaquin G:\Agenda-Ordinances-Resol\CalleJoaquin Condemnation.DOC sz Attachment RESOLUTION NO. RESOLUTION OF NECESSITY OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO AUTHORIZING THE ACQUISITION BY EMINENT DOMAIN OF CERTAIN REAL PROPERTY FOR THE CONSTRUCTION OF THE CALLE JOAQUIN RELOCATION PROJECT (APN 053-171-025; Wayne A. Hanson and Mary Lynch Hanson, Co-Trustees U/D/T dated January 6, 1982, F/B/O The Wayne and Mary Jane Hanson Trust, Owners; APN 053-171-021; BHG Property LLC and GJB Remainder LLC, Owners) THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO DOES HEREBY FIND, DETERMINE, ORDER AND RESOLVE AS FOLLOWS: RECITALS: 1. The City of San Luis Obispo wishes to acquire certain parcels of real property described herein below for public use by the exercise of the power of eminent domain. The acquisition of such property is required to complete the construction and acquisition of improvements approved in connection with the Calle Joaquin Relocation Project ("the Project'). A general description of the Project is contained in the Staff Report dated November 16, 2004, and incorporated by reference. 2. Pursuant to Chapter 4, Title 7, Part 3 of the Code of Civil Procedure, written notice of the intent to consider adopting this resolution of necessity was sent to the owner(s)of record pursuant to the last equalized County Assessment Roll. The notice specified that the time and place of the hearing on this resolution of necessity would be on November 16,.2004,at 7:00 p.m. in the City Council Chamber, 990 Palm Street, San Luis Obispo. A written request to appear has been received from: 3. Due consideration of all oral and documentary evidence introduced has been given; Now therefore, by vote of two-thirds or more of its members, the City Council of the City of San Luis Obispo does find and resolve as follows: a. The findings and declarations contained in this resolution are based upon the record with respect to the Project before the City Council at its hearing of November 16, 2004, the Staff Report dated November 16, 2004, and the testimony, records and documents produced at the hearing, all of which are incorporated by this reference. b. The properties to be acquired are described in Exhibits A and B attached hereto and made a part hereof; C. The said properties are to be acquired for public road purposes, pursuant to the authority granted in California Constitution Article I Section 19; California Government Code Sections 37350, 37350.5,40401 and 40404;Title 7, Part 3 of the Code of Civil Procedure; and other provisions of law; C3 Attachment RESOLUTION NO. November 16, 2004 Page 2 of 2 d. The public interest and necessity requite the proposed project; e. The proposed project is planned and located in the manner which will be most compatible with the greatest public good and the least private injury; f. The real property described in herein is necessary for the proposed project; and g. The offer required by Section 7267.2 of the Government Code has been made to the owner(s)of record of the property. The City Attorney and special counsel, Price, Postel &Parma LLP, are hereby AUTHORIZED AND EMPOWERED: To acquire in the City of San Luis Obispo's name, by condemnation, the said properties in accordance with the provisions of the California Eminent Domain Law in the Code of Civil Procedure and the Constitution of California; To prepare and prosecute in the City's name such proceedings in the proper court as are necessary for such acquisition; and To deposit the probable amount of compensation, based on an appraisal, and to apply to said court for an order permitting the City to take immediate possession and use of said real properties for said public uses and purposes. PASSED,APPROVED,AND ADOPTED this 16th day of November,2004, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: MAYOR OF THE CITY OF SAN LUIS OBISPO ATTEST: CITY CLERK APPROVED AS TO FORM: 50M'P. LOWELL City Attorney Attachment Exhibit A 1585 Calle_ioaauin LEGEND 0 15 30 -- 45 50\ Hanson Parcel(before takes): 2.40 Ac. 1:1250 ` \ (104,467.80 SF) \. Slope Easements(SE)(3 total): 0.052 (2,250.57 SF)SF). City ROW: 0.161 Ac. \ (6,993.78 SF) \ a Temporary Construction Easements(TCE)(3 total): 0.059 Ac. (2,558.09 SF) Hanson Triangular Remainder-0.O10Ac. TICE.Cl: 139.10 SF (416.16 SF) \ (Including 1 TCE) \ SE C2:.549.56 SF ROW C3:6993.76 SF a� `Q► SE C4: 1277.90 SF \ TM C5:1282:54 SF I I I APN: 053-171-025 i Q N o : _ A ' SE C6:.423a1JSF 5F r _ 1, TCE.C7,1136.4Hanson Main \ Remainder-2.176-A0. \ (94,807.29 SF) (Including 2 TCEs) ) , 11 — — Cage Joaquin (Ex18U,,) / annon CALLE JDADUIN REALIGNMENT r:.rco.P9i ,�.a�m.iw.,.. - 8 ,.<•.,,., .......;,;,;,1io::uivo..:a::u+.ci•e�o` EXHIBIT C - APN: 053-171-025 DRAWN BY: TR CHECKED BY: SJH DATE' 09/15/04 iaa vwa :wenn•i4M, rc .�a>u J ��L Att Exhibit B 1625 Calle loaouin Color-coded Plan of Motel 6 Property LEGEND 0. 5 10 15 20 Mood 6 Rroel 3.36 Ac t:a00 (146,361.60 SF) Tanpomry ComwWon E2omnant M A2): 0.160 Ac (6.984.91 SF) Cty ROW(RDW AL): 0.009 Ar- (427.36 c(427.36 SF) I APN: 053-171-021 (not shown in entirety) I a m a i i i Cdte Joaquin (Enttstlag) .. CALLE JOAQUIN kEALICNMtNf ♦ff CC AILI M!-m,A RI.1pi i1CP04• -•--..•w wt s-iv r--r.ti•-, ••• ••• gym•"®®�"•���'-� EXHIBIT A - APN: 053-171-021 •o•�wnv �+,w•.aw•w .•:a.u, tae ir��ionw'.ho�' DknWN BY: TR CHFCKFO BY: SJHDATE: 09/17/04 J • `� /a/t7,a 4 UGGLEBEE RECEIVED Mk EE 5 2B4 November 15,2W4 J SLO CITY CLERK LAW OFFICES Clerk of the City of San Luis Obispo 990 Palm Street San Luis Obispo,CA 93401 Re: Property at 1585 Calle Joaquin, San Luis Obispo APN: 053-171-025 Calle Joaquin Realignment Project NOTICE OF REQUEST TO APPEAR AND BE HEARD. This office and the Law Offices of William S. Walter,APC, represent the WAYNE AND MARY JANE HANSON TRUST,WAYNE L. HANSON, Trustee(collectively, "HANSON"),and WESTERN INN("WESTERN'),the property owner and operator,respectively, of the Rose Garden Inn. This NOTICE OF REQUEST TO APPEAR AND BE HEARD is submitted in response to the California Code of Civil Procedure Section 1245.235 notice dated November 1,2004 and served by certified mail and U. S. mail on HANSON,announcing a meeting of the City Council on November 16,2004, "to consider adopting a Resolution of Necessity to acquire by eminent domain a portion of[your] real property located at 1585 Calle Joaquin in San Luis Obispo,California."Although officials of the City were aware of and met with our client,WESTERN, regarding the subject matter of the scheduled City Council meeting,no notice of the November le meeting of the City Council was sent to WESTERN. By way of example and not limitation,we hereby submit,the following points and authorities for consideration by the City Council in support of our request to appear and be heard: Objection No. 1: The Notice Given Violates Code of Civil Procedure §§ 1245.235; 1245.350. Code Civ.Proc. §1245.235. "(a) . . . the public entity may adopt a resolution of necessity only after the governing body has given each person whose 1 1 235 W.BERNARDO COURT property is to be acquired by eminent domain . . . a reasonable opportunity to appear and be heard . . .. SUITE B (b)The notice required by subdivision(a) shall be sent by first-class mail to SAN DIEGO each person described in subdivision(a)and shall state all of the following: CALIFORNIA (1)The intent of the governing body to adopt the resolution. (2)The right of such person to appear and be heard on the matters referred to 92127 in Section 1240.030. (ass)487-1882 (3) Failure to file a written request to appear and be heard within 15 days FAX(858)487-3783 stmugglebee@sbcglobal.net Clerk of the City of San Luis Obispo November 15,2004 Page 2 of 7 after the notice was mailed will result in waiver of the right to appear and be heard. (c)The governing body, or a committee of not less than 11 members thereof designated by the governing body if the governing body has more than 40 members, shall hold a hearing at which all persons described in subdivision(a)who filed a written request within the time specified in the notice may appear and be heard on the matters referred to in Section 1240.030. Such a committee shall be reasonably representative of the various geographical areas within the public entity's jurisdiction. The governing body need not give an opportunity to appear and be heard to any person who fails to so file a written request within the time specified in the notice. If a committee is designated by the governing body pursuant to this subdivision to hold the hearing,the committee, subsequent to the hearing, shall provide the governing body and any person described in subdivision (a)who has appeared before the committee with a written summary of the hearing and a written recommendation as to whether to adopt the resolution of necessity. Any person described in subdivision(a) who has appeared before the committee shall also be given an opportunity to appear and be heard before the governing body on the matters referred to in Section 1240.030. (d)Notwithstanding subdivision(b),the governing body may satisfy the requirements of this section through any other procedure that has given each person described in subdivision(a) reasonable written personal notice and a.reasonable opportunity to appear and be heard on the matters referred to in Section 1240.030." Code Civ.Proc. §1245.350. "(a)The legislative body may refuse to consent to the acquisition with or without a hearing, but it may adopt the resolution required by this article only after the legislative body has held a hearing at which persons whose property is to be acquired by eminent domain have had a reasonable opportunity to appear and be heard." The date of service of the notice is November 1, 2004, but"any period of notice and any right or duty to do any act or make any response within any period or on a date certain after the service of the document,which time period or date is prescribed by statute or rule of court(15 days), shall be extended five calendar days,upon service by mail,if the place of address and the place of mailing is within the State of California. "(Code Civ.Proc. §1013(a)) The scheduled hearing date of November 16'did not provide a reasonable opportunity for HANSON to file a request to appear and be heard,and WESTERN received no notice, whatsoever,in spite of the fact that their business interest is subject to the proposed Resolution of Necessity. On the basis of the foregoing, we should be given the opportunity to appear and be heard. Clerk of the City of San Luis Obispo November 15,2004 Page 3 of 7 Objection No. 2: It Has Been Predetermined That The Property Is To Be Taken. A hearing on the resolution of necessity must involve"a good faith and judicious consideration of the pros and cons of the issue and that the decision to take be buttressed by substantial evidence of the existence of the three basic requirements set forth in Code of Civil Procedure, section 1240.030."(Redevelopment Agency v. Norm's Skmen(1985) 173 Ca1.App.3d 11221, 1125-1126, 1127 [holding that property owners may invalidate agencies' adoption of a resolution of necessity by proving it was a"sham"or"simply 'rubber stamped' a predetermined result").) City officials have gone on record as early as May 2004 that". . . the City of San Luis Obispo City Council is willing to use it(sic.)power of eminent domain to assure the acquisition."(Letter dated May 20,2004, signed by Michael D.McCluskey,Director of Public Works on behalf of the City of San Luis Obispo.)Our response to Mr. McCluskey stated, in part, "Similar to the opportunity afforded by the Army, we would expect a fair and open proceeding, managed in compliance with the laws concerning public taking of private property." In a bad faith effort to overcome the requirements imposed by Code Civ. Proc. § 1240.030,City officials,without entering into an Exclusive Negotiation Agreement, directed COSTCO to retain HAMNER JEWELL&ASSOCIATES (normally retained by the City to act on its behalf)and submit a private offer to purchase the subject portion of HANSON'S real property. COSTCO did as directed by the City, retained Lillian Jewell, and at her recommendation hired Reeder, Gilman&Borgquist ("Reeder"),licensed real estate appraisers,to prepare a private,limited appraisal for COSTCO'S use in preparing their private unsolicited offer to purchase a portion of HANSON'S real property. The COSTCO offer included". . . Costco was working with the City of San Luis Obispo to obtain an appraisal of the interests in your client's property that will need to be acquired by the City for the realignment of Calle Joaquin. Warren Reeder. . . has been retained to provide the necessary appraisals. It is my understanding that he provided your client with a letter to that effect and that he spoke with your client directly in the course of gathering information about the property deemed relevant to completing the appraisal process."(Letter from David Franklin,Esq.,dated September 17,2004.)The conditional offer for the described interests was $186,000. In response to the COSTCO offer HANSON explained that it was not prepared to consider the offer. "I do not feel that my client should be pushed into responding to an unsolicited offer without enough time to make a thorough appraisal based on the impact on their remaining property if they sold a portion of the property to Costco for the purpose of constructing a new road. (e.g.,CCP§ 1263.410,et seq.)"(Letter from Stephen T. Mugglebee, Esq.,dated September 30,2004)HANSON also was not given an opportunity "to accompany the appraiser during the inspection of the property." (Gov. Code§6182(b)(1)) "My client offered to meet with Mr. Reeder and give him access to the property,but Mr. Reeder declined."(Letter from Mugglebee, dated September 30, 1 I I Clerk of the City of San Luis Obispo November 15, 2004 Page 4 of 7 2004) In complete disregard of the City's obligation to act in"good faith and judicious consideration of the pros and cons of the issue,"Jewell was immediately dropped by COSTCO after their offer was submitted and thereafter,Jewell was retained by the City to incorporate the actions taken by COSTCO into the acts of the City.Those acts of the City included submitting an offer in the exact amount offered by COSTCO,and was based on the same Reeder appraisal prepared for COSTCO. The City Council should consider the statement made by the court in the Norm's Slauson case,"by the time the Agency actually conducted a hearing to determine the `necessity' for taking the property in question, it had,by virtue of its contract with a developer and the issuance of revenue bonds, irrevocably committed itself to take the property in question, regardless of any evidence that might be presented at that hearing."(Redevelopment Agency v.Norm's Slauson(1985) 173 Cal.App3d 1121, 1127.)There is no doubt that City officials predetermined to take our client's property, and disregarded the statutory requirements imposed on a public entity in an effort to avoid the responsibilities those requirements imposed on the City to protect HANSON and WESTERN. Mr.McCloskey was notified in writing that the City should be following the code requirements for a public taking if in fact the City intended to acquire the property. Objection No. 3: No Permit Allowing The Project To Proceed Has Been Issued By The Army Corps Of Engineers(11COE11. COSTCO made an application for permit to the COE seeking permission to proceed with the realignment of Calle Joaquin.The project site included HANSON'S property. HANSON received notice of the application and was given an opportunity to make comment. Comments were timely submitted on behalf of HANSON, and the COE determined not to issue the requested permit at this time based on environmental considerations. In spite of knowledge that the COE has determined that it will not issue a permit allowing the planned realignment of Calle Joaquin at this time, and the possibility that there may be unacceptable environmental impacts from the projects, based on the currently planned realignment, the City has rushed forward.The hearing for Resolution of Necessity is at best premature in light of the COE current position.At worst,holding the hearing at this time can be seen as an effort to cover up the fact that the City is acting in violation of a number of applicable code sections.The City's attempt to cloak itself with the acts of COSTCO, which acts may have been done at the direction of the City, did not provide legitimacy to those acts on behalf of a public taking through the acts of Jewell and other City officials on behalf of the City. The City's interest in proceeding with a hearing on Resolution of Necessity without the issuance of required permit from the COE is further evidence that the taking of Clerk of the City of San Luis Obispo November 15,2004 Page 5 of 7 HANSON'S property has been predetermined regardless of the evidence presented at the meeting. Without the COE permit, the City cannot support a finding that the planned project or location chosen would be the most compatible with the greatest public good and the least private injury. (Code Civ. Proc. §1245.230) It cannot be said that there are no alternative plans that would achieve an equal or greater public good and a lesser private injury. Objection No.4: The"Reeder"Appraisal Was Not Prepared Prior To The Negotiations And Does Not Include All Of The Elements Of Compensation Required For A Taking By The City. Code of Regulations §6182 states,in part: "(b)Before negotiations are initiated(see sub section 6008(n)) a public entity shall: (1)Have the property appraised, giving the owner or his representative designated in writing an opportunity,by reasonable advance written notice,to accompany the appraiser during the inspection of the property." (2)If the owner of real property is also the owner of a business conducted on the real property to be acquired or on the remainder, inform him of his possible right to compensation for loss of goodwill.The public entity should include a copy of the pertinent provisions of the Eminent Domain Law (Code of Civil Procedure Sections 1230.010 et seq. ). (3)Establish an amount it believes to be just compensation for the property,which amount shall,in no event, be less than the public entity's approved appraisal of the fair market value of the property as improved. (c)The determination of just compensation shall be based upon consideration of: (1)The real property being acquired; (2)Where the real property acquired is part of a larger parcel,the injury,if any,to the remainder; and (3) Loss of goodwill, where the owner of the real property is also the owner of a business conducted upon the property to be acquired or on the remainder and where the provisions of the Eminent Domain Law pertaining to compensation for loss of goodwill are satisfied. Goodwill consists of the benefits that accrue to a business as a result of its location, reputation for dependability, skill or quality,and any other circumstances resulting in probable retention of old or acquisition of new patronage. (d)As soon as possible after the amount of just compensation is established, the public entity shall offer to acquire the property for the full amount so established and shall provide the owner with a written statement of the basis for determination of just compensation.The statement shall include the following: (1)A general statement of the public use for which the property is to be acquired. (2)A description of the location and extent of the property to be taken,with sufficient detail for reasonable identification, and the interest to be acquired. (3)An inventory identifying the buildings, structures,fixtures, and other improvements. (4)A recital of the amount of the offer and a statement that such amount: Clerk of the City of San Luis Obispo November 15,2004 Page 6 of 7 (A) Is the full amount believed by the public entity to be just compensation for the property taken; (B)Is not less than the approved appraisal of the fair market value of the property as improved; . (C)Disregards any decrease or increase in the fair market value of the real property to be acquired prior to the date of valuation caused by the public improvement for which the property is to be acquired for such public improvement,other than that due to physical deterioration within the reasonable control of the owner or occupant;and (D)Does not reflect any consideration of or allowance for any relocation assistance and payments or other benefits which the owner is entitled to receive under an agreement with the public entity,except for an amount to compensate the owner for that portion of loss of goodwill provided in accordance with Section 6100. (5)If the real property is a portion of a larger parcel,the statement shall include an apportionment of the total estimated just compensation for the partial acquisition between the value of the property being taken and the amount of damage,if any, to the remainder of the larger parcel from which such property is taken. (6) If the owner of the real property to be acquired is also the owner of a business conducted upon the property or the remainder,the statement shall include an indication of the amount of compensation for loss of goodwill. (e)At the initiation of negotiations(see sub section 6005(n))a public entity shall provide written notification to the owner of a business conducted on the real property to be acquired or on the remainder, who is not also the owner of the real property, concerning his possible right to compensation for loss of goodwill.The public entity should include a copy of the pertinent provisions of the Eminent Domain Law (Code of Civil Procedure, Section 1230.010 et seq.)." COSTCO hired Reeder to prepare an appraisal for COSTCO'S use in a private, unsolicited offer to purchase real property("the dirt")and was not intended to meet the requirements of a taking by a public entity. None of the above-referenced code requirements including"loss of goodwill,"or allowing an owner to"accompany the appraiser during the inspection of the property"were complied with because the offer did not involve a taking by a public entity.Attorney Franklin's understanding regarding the manner in which Reeder conducted the appraisal (Franklin letter dated September 17,2004 referenced above) is contradicted by HANSON(Mugglebee letter dated September 30, 2004 referenced above) wherein it is stated Reeder refused to meet with the owner or inspect the property as to the nature and extent of any impact from the acquisition to the remainder. Nevertheless,acting without any prior authorization or resolution by the City Council, the City offered the same"Reeder Appraisal"that was prepared for COSTCO as a good faith appraisal by the City for purposes of meeting the legal requirements for negotiation with HANSON and WESTERN.The City's only claim of connection to the"Reeder Appraisal"lies in the conflicted relationship between Jewell, COSTCO and the City. It appears that relationship was directed by the City so that Jewell could establish a connection between the private actions of COSTCO and the public actions Clerk of the City of San Luis Obispo November 15,2004 Page 7 of 7 of the City.Any evidence offered on the record in support of a Resolution of Necessity would thus be tainted by a conflict of interest on the part of the City's representative,Jewell,and offers proof that the City's adoption of a resolution of necessity under these circumstances is a"sham"or"simply 'rubber stamping' a predetermined result. "(Redevelopment Agency v.Norm's Slauson(1985) 173 CalApp3d 1121, 1127) The foregoing objections,and other that may be presented on behalf of our clients, should be heard and considered by the City Council. We request that the City in its deliberations and negotiations regarding this matter act in compliance with all applicable code sections as to both the letter of the law and the spirit of the law,and in good faith. Our clients have been good business citizens of the community for many years and provide necessary accommodations to the traveling public which is an essential element of the City's efforts to attract visitors to the area. HANSON and WESTERN should be treated with the utmost fairness and courtesy in any dealings that will have an impact on their business property and interests. We ask that this NOTICE OF REQUEST TO APPEAR AND BE HEARD be accepted and the matters stated herein be entered into the record and be considered by the City Council. Sincerely, Stephen T. Mugglebee Attorney at Law STM:smm Cc: Wayne Hanson Mayor and City Council Members William S. Walter,Esq. Anthony W. Bagnette, Esq. IRRT: 04-0087 r N D (0 T Z z 0 m O c -p ;u� X30 t m _j = .. m oma D 0 co W D Z O r— �i 'c (n 0 ca 'W_^ VTI V 0 �IIUIIIIIIIII ��� lutS OBISPOclt�! O S�►1'1 990 Palm Street, San Luis Obispo, CA 93401-3249 RECEIVED � Confidential Attorney-Client Privilege NOV 1 .6 2CO4 I MEMORANDUM SLO CITY CLERK From the Office of the City Attorney November 16, 2004 To: Mayor and City Council From: Gilbert.A. Trujillo, Assistant City Attorne�j Jonathan P. Lowell, City Attorney Subject: Correspondence from Stephen T. Mugglebee,.Esq. dated November 15, 2004 Re: Notice of Request to Appear and Be Heard Please find attached a letter from Stephen T. Mugglebee,Esq. regarding the resolution of necessity which was noticed for a public hearing on November 16, 2004 and subsequently pulled from the agenda at the recommendation of the City's condemnation attorney Todd Amspoker. Mr, Amspoker confirmed that he notified the parties of the continuance to December 7, 2004. He will attempt to reach all parties again to confirm with them that the hearing isnot on the November 16`h agenda. Since the matter is not on the agenda, no action by the City Council is required in response to the letter. The objections raised by Mr. Mugglebee will be responded to by Mr. Amspoker prior to December 7, 2004. Please advise if you have any questions or comments. Cc: Ken Hampian CC" OThe City of San Luis Obispo is committed to include the disabled in all of its services,programs and activities. , `,, Telecommunications Device for the Deaf(805)781-7410. MUGGLEBEE M GGLEEEE November 15, 2004 LAV,,-*GFFICE_ Clerk of the City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Re;: Property at 1585 Calle Joaquin, San Luis Obispo APN: 053-171-025 Calle Joaquin Realignment Project NOTICE OF REQUEST TO APPEAR AND BE HEARD. This office and the Law Offices of William S. Walter,APC,represent the WAYNE AND MARY JANE HANSON TRUST, WAYNE L. HANSON, Trustee(collectively,"HANSOM"),and WESTERN INN("WESTERN'),the property owner and operator, respectively,of the Rose Garden Inn. This NOTICE OF REQUEST TO APPEAR AND BE HEARD is submitted in response to the California Code of Civil Procedure Section 1245.235 notice dated November 1,2004 and served by certified mail and U. S. mail on HANSON,announcing a meeting of the City Council on November 16,2004, "to consider adopting a Resolution of Necessity to acquire by eminent domain a portion of[your] real property located at 1585 Calle Joaquin in San Luis Obispo, California."Although officials of the City were aware of and met with our client,WESTERN, regarding the subject matter of the scheduled City Council meeting,no notice of the November 16'meeting of the City Council was sent to WESTERN. By way of example and not limitation, we hereby submit, the following points and authorities for consideration by the City Council in support of our request to appear and be heard: Objection No. 1: The Notice Given Violates Code of Civil Procedum §§ 1245.235; 1245.350. Code Civ. Proc. §1245.235. "(a) . . . the public entity may adopt a resolution of necessity only after the governing body has given each person whose property is to be acquired by eminent domain . . . a reasonable opportunity to 1 1 235 W. BERNARDO COURT appear and be heard . .... SUITE 6 (b)The notice required by subdivision (a) shall be sent by first-class mail to SAN DIEGO each person described in subdivision(a)and shall state all of the following: CALIFORNIA (1)The intent of the governing body to adopt the resolution. (2)The right of such person to appear and be heard on the matters referred to 92127 in Section 1240.030. (858)487-1882 (3) Failure to file a written request to appear and be heard within 15 days FAX(858)487-3783 stniuggiebee@sbcglobal.net i Clerk of the.City of San Luis Obispo November 15, 2004 Page 2 of 7 after the notice was mailed will result in waiver of the right to appear and be heard. (c)The governing body,or a committee of not less than 11 members thereof designated by the governing body if the governing body has more than 40 members, shall hold a hearing at which all persons described in subdivision (a)who filed a written request within the time specified in the notice may appear and be heard on the matters referred to in Section 1240.030. Such a committee shall be reasonably representative of the various geographical areas within the public entity's jurisdiction. The governing body need not give an opportunity to appear and be heard to any person who fails to so file a written request within the time specified in the notice. If a committee is designated by the governing body pursuant to this subdivision to hold the hearing,the committee,subsequent to the hearing, shall provide the governing body and any person described in subdivision (a)who has appeared before the committee with a written summary of the hearing and a written recommendation as to whether to adopt the resolution of necessity. Any person described in subdivision(a) who has appeared before the committee shall also be given an opportunity to appear and be heard before the governing body on the matters referred to in Section 1240.030. (d)Notwithstanding subdivision(b),the governing body may satisfy the requirements of this section through any other procedure that has given each person described in subdivision(a) reasonable written personal notice and a reasonable opportunity to appear and be heard on the matters referred to in Section 1240.030." Code Civ.Proc. §1245.350. "(a)The legislative body may refuse to consent to the acquisition with or without a hearing, but it may adopt the resolution required by this article only after the legislative body has held a hearing at which persons whose property is to be acquired by eminent domain have had a reasonable opportunity to appear and be heard." The date of service of the notice is November 1, 2004, but"any period of notice and any right or duty to do any act or make any response within any period or on a date certain after the service of the document,which time period or date is prescribed by statute or rule of court(15 days), shall be extended five calendar days,upon service by mail, if the place of address and the place of mailing is within the State of California. "(Code Civ.Proc. §1013(a)) The scheduled hearing date of November 16' did not provide a reasonable opportunity for HANSON to file a request to appear and be heard,and WESTERN received no notice,whatsoever, in spite of the fact that their business interest is subject to the proposed Resolution of Necessity. On the basis of the foregoing, we should be given the opportunity to appear and be heard. Clerk of the City of San Luis Obispo November 15,2004 Page 3 of 7 Objection No. 2: It Has Been Predetermined That The Property Is To Be Taken. A hearing on the resolution of necessity must involve"a good faith and judicious consideration of the pros and cons of the issue and that the decision to take be buttressed by substantial evidence of the existence of the three basic requirements set forth in Code of Civil Procedure, section 1240.030." (Redevelopment Agency v. Norm's Slausen(1985) 173 CalApp.3d 11221, 1.125-1126, 1127 [holding that property owners may invalidate agencies' adoption of a resolution of necessity by proving it was a"sham"or"simply 'rubber stamped' a predetermined result"D City officials have gone on record as early as May 2004 that". . . the City of San Luis Obispo City Council is willing to use it(sic.)power of eminent domain to assure the acquisition." (Letter dated May 20,2004,signed by Michael D. McCluskey,Director of Public Works on behalf of the City of San Luis Obispo.) Our response to Mr. McCluskey stated, in part, "Similar to the opportunity afforded by the Army, we would expect a fair and open proceeding, managed in compliance with the laws concerning public taking of private property." In a bad faith effort to overcome the requirements imposed by Code Civ.Proc. § 1240.030,City officials,without entering into an Exclusive Negotiation Agreement, directed COSTCO to retain HAMNER.JEWELL&ASSOCIATES (normally retained by the City to act on its behalf) and submit a private offer to purchase the subject portion of HANSON'S real property. COSTCO did as directed by the City,retained Lillian Jewell, and at her recommendation hired Reeder, Gilman&Borgquist ("Reeder'),licensed real estate appraisers,to prepare a private,limited appraisal for COSTCO'S use in preparing their private unsolicited offer to purchase a portion of HANSON'S real property. The COSTCO offer included". . . Costco was working with the City of San Luis Obispo to obtain an appraisal of the interests in your client's property that will need to be acquired by the City for the realignment of Calle Joaquin. Warren Reeder. . . has been retained to provide the necessary appraisals. It is my understanding that he provided your client with a letter to that effect and that he spoke with your client directly in the course of gathering information about the property deemed relevant to completing the appraisal process."(Letter from David Franklin,Esq., dated September 17,2004.)The conditional offer for the described interests was $186,000. In response to the COSTCO offer HANSON explained that it was not prepared to consider the offer."I do not feel that my client should be pushed into responding to an unsolicited offer without enough time to make a thorough appraisal based on the impact on their remaining property if they sold a portion of the property to Costco for the purpose of constructing a new road. (e.g., CCP§ 1263.410,et seq.)"(Letter from Stephen T. Mugglebee,Esq., dated September 30,2004)HANSON also was not given . an opportunity"to accompany the appraiser during the inspection of the property." (Gov. Code§ 6182(6)(1))"My client offered to meet with Mr.Reeder and give him access to the property,but Mr.Reeder declined." (Letter from Mugglebee, dated September 30, Clerk of the City of San Luis Obispo November 15,2004 Page 4 of 7 2004) In complete disregard of the City's obligation to act in"good faith and judicious consideration of the pros and cons of the issue,"Jewell was immediately dropped by COSTCO after their offer was submitted and thereafter,Jewell was retained by the City to incorporate the actions taken by COSTCO into the acts of the City.Those acts of the City included submitting an offer in the exact amount offered by COSTCO, and was based on the same Reeder appraisal prepared for COSTCO. The City Council should consider the statement made by the court in the Norm's Slauson case, "by the time the Agency actually conducted a hearing to determine the `necessity' for taking the property in question,it had,by virtue of its contract with a developer and the issuance of revenue bonds, irrevocably committed itself to take the property in question,regardless of any evidence that might be presented at that hearing."(Redevelopment Agency v.Norm's Slauson(1985) 173 Cal.App.3d 1121, 1127.)There is no doubt that City officials predetermined to take our client's property, and disregarded the statutory requirements imposed on a public entity in an effort to avoid the responsibilities those requirements imposed on the City to protect HANSON and WESTERN. Mr. McCloskey was notified in.writing that the City should be following the code requirements for a public taking if in fact the City intended to acquire the property. Objection No. 3: No Permit Allowing The Project To Proceed Has Been Issued By The Army Corps Of Engineers("COE'�. COSTCO made an application for permit to the COE seeking permission to proceed with the realignment of Calle Joaquin.The project site included HANSON'S property. HANSON received notice of the application and was given an opportunity to make comment. Comments were timely submitted on behalf of HANSON,and the COE determined not to issue the requested permit at this time based on environmental considerations. In spite of knowledge that the COE has determined that it will not issue a permit allowing the planned realignment of Calle Joaquin at this time, and the possibility that there may be unacceptable environmental impacts from the projects,based on the currently planned realignment, the City has rushed forward.The hearing for Resolution of Necessity is at best premature in light of the COE current position. At worst, holding the hearing at this time can be seen as an effort to cover up the fact that the City is acting in violation of a number of applicable code sections.The City's attempt to cloak itself with the acts of COSTCO,which acts may have been done at the direction of the City, did not provide legitimacy to those acts on behalf of a public taking through the acts of Jewell and other City officials on behalf of the City. The City's interest in proceeding with a hearing on Resolution of Necessity without the issuance of required permit from the COE is further evidence that the taking of Clerk of the City of San Luis Obispo November 15, 2004 Page 5 of 7 HANSON'S property has been predetermined regardless of the evidence presented at the meeting. Without the COE permit,the City cannot support a finding that the planned project or location chosen would be the most compatible with the greatest public good and the least private injury. (Code Civ. Proc. §1245.230) It cannot be said that there are no alternative plans that would achieve an equal or greater public good and a lesser private injury. Objection No.4: The"Reeder"Appraisal Was Not Prepared.Prior To The Negotiations And Does Not Include All Of The Elements Of Compensation Required For A Taking By The City. Code of Regulations § 6182 states, in part: "(b) Before negotiations.are initiated(see sub section 6008(n)) a public entity shall: (1)Have the property appraised, giving the owner or his representative designated in writing an opportunity,by reasonable advance written notice,to accompany the appraiser during the inspection of the property." (2)If the owner of real property is also the owner of a business conducted on the real property to be acquired or on the remainder, inform him of his possible right to compensation for loss of goodwill.The public entity should include a copy of the pertinent provisions of the Eminent Domain Law (Code of Civil Procedure Sections 1230.010 et seq. ). (3) Establish an amount it believes to be just compensation for the property,which amount shall, in no event, be less than the public entity's approved appraisal of the fair market value of the property as improved. (c)The determination of just compensation shall be based upon consideration of: (1)The real property being acquired; (2)Where the real property acquired is part of a larger parcel, the injury,if any,to the remainder; and (3)Loss of goodwill, where the owner of the real property is also the owner of a business conducted upon the property to be acquired or on the remainder and where the provisions of the Eminent Domain Law pertaining to compensation for loss of goodwill are satisfied. Goodwill consists of the benefits that accrue to a business as a result of its location,reputation for dependability, skill or quality, and any other circumstances resulting in probable retention of old or acquisition of new patronage. (d)As soon as possible after the amount of just compensation is established,the public entity shall offer to acquire the property for the full amount so established and shall provide the owner with a written statement of the basis for determination of just compensation.The statement shall include the following: (1)A general statement of the public use for which the property is to be acquired. (2)A description of the location and extent of the property to be taken,with sufficient detail for reasonable identification, and the interest to be acquired. (3)An inventory identifying the buildings, structures, fixtures, and other improvements. (4)A recital of the amount of the offer and a statement that such amount: Clerk of the City of San Luis Obispo November 15, 2004 Page 6 of 7 (A)Is the full amount believed by the public entity to be just compensation for the property taken; (B)Is not less than theapprovedappraisal of the fair market value of the property as improved; (C)Disregards any decrease or increase in the fair market value of the real property to be acquired prior to the date of valuation caused by the public improvement for which the property is to be acquired for such public improvement,other than that due to physical deterioration within the reasonable control of the owner or occupant; and (D)Does not reflect any consideration of or allowance for any relocation assistance and payments or other benefits which the owner is entitled to receive under an agreement with the public entity,except for an amount to compensate the owner for that portion of loss of goodwill provided in accordance with Section 6100 . (5)If the real property is a portion of a larger parcel,the statement shall include an apportionment of the total estimated just compensation for the partial acquisition between the value of the property being taken and the amount of damage,if any, to the remainder of the larger parcel from which such property is taken. (6)If the owner of the real property to be acquired is also the owner of a business conducted upon the property or the remainder,the statement shall include an indication of the amount of compensation for loss of goodwill. (e)At the initiation of negotiations(see sub section 6008(n)) a public entity shall provide written notification to the owner of a business conducted on the real property to be acquired or on the remainder,who is not als6the owner of the real property, concerning his possible right to compensation for loss of goodwill.The public entity should include a copy of the pertinent provisions of the Eminent Domain Law (Code of Civil Procedure, Section 1230.010 et seq.)." COSTCO hired Reeder to prepare an appraisal for COSTCO'S use in a private, unsolicited offer to purchase real property("the dirt')and was not intended to meet the requirements of a taking by a public entity.None of the above-referenced code requirements including"loss of goodwill,"or allowing an owner to"accompany the appraiser during the inspection of the property"were complied with because the offer did not involve a taking by a public entity.Attorney Franklin's understanding regarding the manner in which Reeder conducted the appraisal (Franklin letter dated September 17, 2004 referenced above) is contradicted by HANSON(Mugglebee letter dated September 30, 2004 referenced above)wherein it is stated Reeder refused to meet with the owner or inspect the property as to the nature and extent of any impact from the acquisition to the remainder. Nevertheless,acting without any prior authorization or resolution by the City Council, the City offered the same"Reeder Appraisal"that was prepared for COSTCO as a good faith appraisal by the City for purposes of meeting the legal requirements for negotiation with HANSON and WESTERN.The City's only claim of connection to the "Reeder Appraisal"lies in the conflicted relationship between Jewell,COSTCO and the City. It appears that relationship was directed by the City so that Jewell could establish a connection between the private actions of COSTCO and the public actions Clerk of the City of San Luis Obispo November 15,2004 Page 7 of 7 of the City.Any evidence offered on the record in support of a Resolution of Necessity would thus be tainted by a conflict of interest on the part of the City's representative,Jewell, and offers proof that the City's adoption of a resolution of necessity under these circumstances is a"sham"or"simply 'rubber stamping' a predetermined result. " (Redevelopment Agency v. Norm's Slauson(1985) 173 Cal.App3d 1121, 1127) The foregoing objections, and other that may be presented on behalf of our clients, should be heard and considered by the City Council.We request that the City in its deliberations and negotiations regarding this matter act in compliance with all applicable code sections as to both the letter of the law and the spirit of the law, and in good faith. Our clients have been good business citizens of the community for many years and provide necessary accommodations to the traveling public which is an essential element of the City's efforts to attract visitors to the area. HANSON and WESTERN should be treated with the utmost fairness and courtesy in any dealings that will have an impact on their business property and interests.We ask that this NOTICE OF REQUEST TO APPEAR AND BE HEARD be accepted and the matters stated herein be entered into the record and be considered by the City Council. Sincerely, Stephen T. Mugglebee Attorney at Law STM:smm Cc: Wayne Hanson Mayor and City Council Members William S. Walter, Esq.. Anthony W. Baguette,Esq. IRRT: 04-0087 11/1. 2004 17:31 FAX 8057817109 SAN LUIS ADMIN Q001 aaaaasasasaasaassssss ass T% REPORT sss s�assssassssss:sasses TRANSMISSION OR T%/R% NO 1807 CONNECTION TEL 99653978 CONNECTION ID PRICE. POSTEL & ST. TIME 11/15 17:30 USAGE T 01'36 PGS. SENT 8 RESULT OB OFFICE OF THE CITY ATTORNEY C17Y OF SAN LUIS OBISPO 990 Palm Street, San Luis Obispo, CA 93401 (805) 781-7140 FAX(805)781-7409 FAX TRANSMITTAL FORM DATE: 11/15/04 TO; Todd Amspoker, 965-3978 FR=: Gil Trujillo 11T0. PAGES I1vcLUD3:NG COVER: 8 COIGEEMS: Please review the following Notice of Request to Appear from Steven Mubblebee, Esq. and call me to discuss. i A . ; OFFICE OF THE CITY ATTORNEY CITY OF SAN LUIS OBISPO 990 Palm Street, San Luis Obispo, CA 93401 (805) 781-7140 FAX(805) 781-7409 FAX TRANSMITTAL FORM DATE: 11/15/04 TO: Todd Amspoker, 965-3978 FROM: Gil Trujillo NO. PAGES INCLUDING COVER: 8 COMMENTS: Please review the following Notice of Request to Appear from Steven Mubblebee, Esq. and call me to discuss. The information contained in this Facsimile message is ATTORNEY PRIVILEGED- CONFIDENTiAL INFORMATION intended only for the use of the individual or entity named above. !f the reader of this message is not the intended recipient, you are hereby notified that any dissemination, distribution or copy of this communication is strictly prohibited. If you have received this communication in error, please immediately notify us by telephone and return the original message to us at 990 Palm St., San Luis Obispo, CA 93407. Thank you.